Netergy Restructuring To Increase Santa Clara Staff

Santa Clara-based Netergy Networks (Nasdaq: NTRG) Friday said it is closing its Canadian offices in Hull, Quebec and letting 44 people go as a part of a restructuring plan. Netergy still employs a staff of 280 in Santa Clara.

"We had engineers, some sales people and a marketing staff up there," says Netergy VP of Corporate Development John Foster. "Some of the research and
development engineers will come to Santa Clara and some will go to France. The rest of the engineers and some people in sales will go to our Montreal office."

The Internet telephony company has been suffering from major changes. The company lost its CEO and moved its COO to the board of directors. Some 50 Canadian employees quit in the process and Netergy ending up canceling its earnings call all last month. Since then, former CEO Joe Parkinson has rejoined as interim CEO and the Santa Clara facility that builds and tests Netergy's Voice over IP (VoIP) technology is now a subsidiary of the company. But some analysts are cautious about the company's next move.

"It really appears that the company is changing its strategy away from software," says Emerald Research analyst Stan Corker. "I downgraded them to a neutral buy status recently, because it seems like the company is re-evaluating its direction. Further development into another technology will force a further drain on its cash and profitability."

However, Foster says he is confident the company is going in the right direction and the cuts are not too deep.

"Right now, we're not a profitable company," says Foster. "We estimated last time that our cash burn rate would drop by the end of the year and these cuts are putting us in that direction. All I can say is stay tuned and see what develops."